More Americans Will Spend Rather than Save Tax Refund

Most Americans (85%) will receive a federal tax refund averaging $2,803. What will spendthrift Americans do with the money? More than twice as many will spend rather than save it, according to Capital One Banks annual taxes and savings survey.

More than a third (35%) plan to spend all or part of the refund, while only 16% will save it. Nearly a quarter (22%) will use the refund to pay down debt and 4% will invest their returns.

Of those who plan to spend all or part of their refund this year, 23% will spend it on vacation. One in three will spend it on everyday expenses and necessities with the rest spending it on various items, including clothing and accessories (16%), iPads, smartphones and other electronics (15%), and major purchases (16%).

Less than half (42%) were aware that that their take-home pay would decline this year due to the recent elimination of the payroll tax holiday by Congress. The awareness was greater among men, with 47% saying they were very aware of the decline in take-home pay, compared with 38% for women.

At a time when people are seeing smaller paychecks, now more than ever they should take a step back, evaluate their financial goals and consider saving their tax refund, Mickey Konson, managing vice president for Retail Banking at Capital One Bank, said in a statement.

The telephone survey polled 1,006 U.S. adults age 18 and over. It was conducted February 5, 2013  February 10, 2013 by opinion research firm Braun Research of Princeton, N.J.